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SaaS versus Licensing — which model is best for your organisation?

Is it worth making that large upfront cost in licensing, or is it better to pay as you go with software-as-a-service (SaaS)? And what are some things to be aware of when going down the SaaS path? We answer these questions and give an overview of the pros and cons of SaaS and traditional licensing.

Why choose SaaS over licensing?

If you want to keep the balance sheet looking good, SaaS is the better option to software licensing. A cloud-based subscription model means no expense in acquiring and maintaining in-house servers and operations staff. With economies of scale through a multi-tenant set up, the costs can be lower when it comes to hosting with SaaS. Also, ongoing support, upgrades and new features are often inclusive of SaaS services; it’s not a re-occurring ‘add on’ with some additional fee.

Freeing up staff to work on more mission critical or innovative projects is also another major benefit to going down the SaaS path. Having even a couple members of your tech team no longer held down with monitoring, administering and maintaining servers can significantly boost the team’s overall productivity. Also, it make you look more attractive in the eyes of the business by working on projects that are associated with revenue and money making, not cost and expense.

Managing activities from a central location with a one-to-many model is simpler than tying one application to one desktop. As people’s usage of applications can change dynamically—where one user needs to use a tool one-off or irregular use of all sorts of different tools—having these located in the cloud can be easier than swapping desktops or laptops.

Scaling up when demand for software spikes suddenly can be done quickly by simply adding more licenses or seats in SaaS. This can be done through a self-service interface, without having to call up the vendor. This also applies for scaling down and pricing changes dynamically with usage.

Why choose licensing over SaaS?

Where your data resides and who has the control over its security is one reason why licensing could be the preferable option over SaaS. Healthcare and government organisations, for example, are likely to go with licensing over SaaS due to holding highly sensitive data, which means they are required to follow stringent compliance rules around security.

Licensing also means you have more avenues to pick whatever vendor you like to integrate your software apps with, as the internal tech team has the freedom to build custom integrations into any system to exchange data. This mean you are not tied to using the SaaS APIs.

Being able to query your data from an internal database is what licensing can allow you to do over SaaS. Using the capabilities of the SaaS interface may be adequate for simple tasks, but when wanting particular reports or further insight into usage then having a license and host controlled by you, not the SaaS provider, can be beneficial.

So what are some things to be aware of when going SaaS?

It’s not a huge upfront cost, but at some point over time SaaS will surpass a cost of a license. The analogy is this: Renting may be cheaper than buying a house, but over time the mortgage gets paid off and there’s more control on how much investment goes into supporting and maintenance of the house.

If you are facing this dilemma right now, chat to our team. We can provide you with the information you need to make the right decision for your organisation.